Can't pay back 1.25 million? Shenzhen Dashang was ordered by the court to reorganize

This scene is still very sad.

That year, it was one of the "Four Young Masters of South China City" standing at the top. But now, it has been ordered by the court to reorganize due to millions of debts, and faces risks such as suspension of trading, bankruptcy liquidation, and delisting...

One of the “Four Young Masters of South China City” can’t even pay back 1.25 million?

Recently, Youkeshu received a "Civil Ruling" and "Decision" delivered by the Changsha Intermediate People's Court (hereinafter referred to as "Changsha Intermediate Court"). The Changsha Intermediate Court ruled to accept the applicant's reorganization application for Youkeshu , and designated the Youkeshu Liquidation Group, the temporary administrator in the pre-reorganization stage, as the company's administrator.

In other words, a tree has officially entered the reorganization process .

In February this year , Shenzhen Yuanyang E-Commerce Co., Ltd. (hereinafter referred to as "Shenzhen Yuanyang") issued a "Notice Letter" to Youkeshu , stating that because it could not repay its due debts, was seriously insolvent and obviously lacked repayment ability, but had reorganization value, it applied to the Changsha Intermediate People's Court for reorganization and at the same time applied to initiate the pre-reorganization procedure.

It is reported that Youkeshu owed Shenzhen Yuanyang 1.25 million yuan . According to the "Settlement Agreement" signed by the two parties earlier , Youkeshu had to repay the debt to Shenzhen Yuanyang before October 30, 2023. However, it has been nearly a year overdue and the debt has not been paid yet. The latter had to apply to the court for reorganization.

One week after the "Notice Letter" was delivered, Youkeshu received a notice from the Changsha Intermediate People's Court, reminding it that if it has any objections to the application, it must submit them within a time limit.

But Youkeshu, which is already deeply mired in the quagmire, heavily in debt, and suffering huge losses year after year, may be longing for such an opportunity for restructuring.

Once the reorganization begins, Youkeshu will be able to temporarily suspend the repayment of debts under other litigation procedures, and the execution of collateral by secured creditors will also be suspended, thus avoiding the pressure of immediate debt repayment and buying time for the company to adjust its financial situation.

The financial report shows that as of the first half of this year, Youkeshu's total liabilities reached 756 million yuan, of which current liabilities reached 744 million yuan . According to Qichacha information, Youkeshu still has a number of huge debts that are under litigation and execution due to failure to repay.

For example, the 46 million yuan from Pudong Development Bank Nanjing Branch , the 26.4 million yuan from China Everbright Bank Nanjing Branch, and so on. In the first half of this year alone, Youkeshu’s overdue bank loan penalty interest reached 3.65 million yuan .

As of the first quarter of this year, the remaining principal amount of Youkeshu's bank loans (including guarantees) was 306 million yuan, all of which were overdue.

As of June this year , Youkeshu's owner's equity was -437 million yuan, its current liabilities exceeded its current assets by 546 million yuan, and a large amount of bank loans were overdue .

In addition, in the first half of this year, the actual controller of Youkeshu was involved in private lending disputes and loan contract disputes with GF Securities, with the amounts involved reaching 211 million yuan and 113 million yuan, respectively.

Under the heavy burden of huge historical debts, Youkeshu's road ahead is full of obstacles. From January to June this year, the recovery of its cross-border e-commerce business was less than expected, the revenue of its main e-commerce business still declined compared with the previous year, and the overall operating performance failed to turn losses into profits ( net loss reached 30.88 million yuan ).

For all the above reasons, Youkeshu actively cooperates with the court and the administrator to carry out pre-bankruptcy reorganization work, and may be able to postpone repayment or reduce debts through bankruptcy reorganization , resolve overdue debt problems, and reduce debt burdens.

At the same time, restructuring may allow Youkeshu to achieve its goals of improving its asset-liability structure and enhancing its ability to continue operating by transferring businesses and assets, reducing or increasing the company's registered capital and other measures .

It can also revitalize the company's operating environment, adjust production layout, optimize business structure, better adapt to market demand and achieve rebirth while maintaining its listing .

What will the road to reorganization be like? Will it be a turnaround or a complete exit from the stage?

From the reorganized progress bar:

In March, the Changsha Intermediate People's Court approved Shenzhen Yuanyang's pre-reorganization application for Youkeshu. Since then, Youkeshu has frequently issued a series of announcements to the market, including pre-reorganization debt claims declaration notices .

Since March, Youkeshu has been issuing progress announcements on pre-reorganization matters every month , informing shareholders of the progress of pre-reorganization related matters, and reminding them of the uncertainty of the acceptance of the bankruptcy application, the possible delisting risk warning of the company's shares, and the risk of termination of listing.

Among them, in June and July, the Changsha Intermediate People's Court agreed to extend Youkeshu's pre-reorganization period by one month and three months respectively, and the last extension was to October 12 , 2024 .

In August, Youkeshu and Beijing Jiurong Consulting Partnership (Limited Partnership) (hereinafter referred to as "Beijing Jiurong") signed the "Common Benefit Debt Financing Agreement", whereby Beijing Jiurong will provide the company with a common benefit debt loan of no more than RMB 50 million (including principal).

*Note: Common debt loans refer to debts incurred during the bankruptcy process to protect the common interests of creditors and the smooth progress of the bankruptcy process. This type of debt takes precedence over ordinary claims when it is paid off . If the bankruptcy property is not sufficient to pay off the claims of the same order, it will be distributed in proportion .

However , at the end of September, before receiving the official reorganization notice from the Changsha Intermediate People's Court, Youkeshu and Beijing Jiurong canceled the signing of the "Common Benefit Debt Financing Agreement" .

At the end of August , Youkeshu’s interim administrator decided to publicly recruit and select (pre-) restructuring investors.

Restructuring investors need to provide support in terms of industry and incremental funds , including restoring and enhancing the company's sustainable operations and profitability , and comprehensively resolving the company's operating and debt risks .

As of September 6, 46 potential investors have registered, including 3 potential industrial investors and 43 potential financial investors . These potential restructuring investors must pay an investment intention deposit of RMB 20 million within 3 working days from the date of receipt of the notice of qualified review .

Can Youkeshu return to the top of the cross-border business through restructuring? It's hard to say, after all, the problems have been accumulated for a long time.

Since falling from the altar in 2021, Youkeshu's business has been going from bad to worse. Its cross-border e-commerce business has been losing money year after year, and the more than 100 million yuan frozen by Amazon due to the account blocking wave has not been recovered, which may become a permanent bad debt in the future.

The funds borrowed for the rapid expansion in the past have now become mountains pressing down on the spine of Youke Tree. The inverse development of debts and assets has made it difficult for it to have more operational possibilities.

Years of losses have earned Youkeshu the "ST" label, and the Shenzhen Stock Exchange has issued a delisting risk warning for its stock trading . The restructuring has also been subject to another delisting risk warning , and the daily price fluctuation limit for its stock trading is 20%.

Now it has entered the stage of reorganization . If the reorganization fails , Youkeshu will be declared bankrupt and then subject to bankruptcy liquidation, and its stocks will be delisted .

The reorganization period is usually determined by the reorganization plan, which is generally 2 to 3 years . In special cases, the bankruptcy administrator can apply to the court for an extension of the reorganization period . It is unknown how long it will take for the tree to complete this transformation, whether it can return to the top of the mountain or become history forever ...

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